Glossary of Insurance Terms and Acronyms

Access

The ability to obtain needed medical care. Access to care is often affected by the
availability of insurance, the cost of the care and the geographic location of providers.

Accountable Care Organization

A network of health care providers that ban together to provide the full continuum
of health care services for patients. The network would receive a payment for all
care provided to a patient and would be held accountable for the quality and cost
of care. Once the provider collects its fee, it may not balance bill the patient
(see Balance Bill).

Actuarial Equivalent

A health insurance plan that offers similar coverage to a standard benefit plan.
Actuarially equivalent plans will not necessarily have the same premiums, cost sharing
requirements or even benefits; however the expected spending by insurers for the
different plans will be the same.

Actuarial Justification

The demonstration by an insurer that the premiums collected are reasonable, given
the benefits provided under the plan or that the distribution of premiums among
policyholders are proportional to the distribution of their expected costs, subject
to limitations of state and federal law.

Actuarial Value

A measure of the average value of benefits in a health insurance plan. It is calculated
as the percentage of benefit costs a health insurance plan expects to pay for a
standard population using standard assumptions and taking into account cost sharing
provisions. Placing an average value on health plan benefits allows different health
plans to be compared.

Actuary

A person professionally trained in the mathematical and statistical aspects of the
insurance industry. Actuaries frequently calculate premium rates, reserves and dividends
and assist in estimating the costs and savings of benefit changes.

Adverse Selection

People with a higher than average risk of needing health care are more likely than
healthier people to seek health insurance. Insurance companies strive to maintain
risk pools of people whose health on average is the same as that of the general
population. Adverse selection results when the less healthy people disproportionately
enroll in a health insurance plan.

Affordable Care Act

Legislation (Public Law 111-148) signed by President Obama on March 23, 2010. Commonly
referred to as the health reform law. ACA is aimed primarily at decreasing the number
of uninsured Americans and reducing the costs of health care. It provides a number
of mechanisms, including mandates, subsidies, and tax credits, to employers and
individuals in order to increase the coverage rate. Additional reforms are aimed
at improving healthcare outcomes and streamlining the delivery of health care. ACA
includes a number of insurance reform requirements, including requiring insurance
companies to cover all applicants and offer the same rates regardless of pre-existing
conditions or gender.

Agent

A person who represents an insurance company to solicit or sell the company's insurance
products. Any agent must be licensed by the MID to legally sell insurance in the
state.

Allowed Amount

Maximum amount on which payment is based for covered health care services. This
may be called "eligible expense," "payment allowance" or "negotiated rate". If your
provider charges more than the allowed amount, you may have to pay the difference.
(See Balance Billing). Many provider contracts with insurers do not allow the provider
to "balance bill" patients if it is in-network treatment.

Annual Limits

Many health insurers place dollar limits upon the claims which the insurer will
pay over the course of a plan year. ACA prohibits health insurers from placing restrictive
dollar annual limits on Essential Health Benefits.

Annuity

Contract sold by insurance companies that pays a monthly (or quarterly, semiannual,
or annual) income benefit for the life of a person (annuitant), for the lives of
two or more persons, or for a specified period of time.

Appeal

A request for your health insurer or plan to review a decision or a grievance again.

Balance Billing

When a provider bills you for the difference between the provider's charge and the
allowed amount. For example, if the provider's charge is $100 and the allowed amount
is $70, the provider may bill you for the remaining $30. Many insurance company's
contracts with the providers prohibit the provider from billing the patient the
remaining $30 if it is in-network treatment.

Beneficiary

The person or party named by the owner of an insurance policy to receive the policy
benefit.

Benefit Package

The set of services, such as physician visits, hospitalization, prescription drugs,
that are covered by an insurance policy or health plan. The benefit package will
specify any cost-sharing requirements for services, limits on particular services
and annual or lifetime spending limits.

Binder

Capitation

A method of paying for health care services under which providers receive a set
payment for each person or "covered life" instead of receiving payment based on
the number of services provided or the costs of the services rendered. The payments
can be adjusted based on the demographic characteristics such as age and gender
or the expected costs of the members.

Case Management

The process of coordinating medical care provided to patients with specific diagnosis
or those with high health care needs. These functions are performed by case managers
who can be physicians, nurses or social workers.

Children's Health Insurance Program (CHIP)

The Children's Health Insurance Program (CHIP) is a Federal/state program that provides
coverage to low and moderate-income children. Like Medicaid, it is jointly funded
and administered by the states and the federal government.

Claim

A formal request for payment related to an event or situation that is covered under
an in-force insurance policy.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) health
benefit provisions in 1986. COBRA provides certain former employees, retirees, spouses,
former spouses and dependent children the right to temporary continuation of up
to 18 months of health coverage at group rates. The law generally covers health
plans maintained by private-sector employers with 20 or more employees, employee
organizations, or state or local governments. Many states have "mini-COBRA" laws
that apply to the employees of employers with fewer than 20 employees.

Co-insurance

Your share of the costs of services covered by your health plan, calculated as a
percent (for example 20%) of the allowed amount for the service. You pay co-insurance
plus any deductibles you owe. For example, if the health insurance plans allowed
amount for an office visit is $100 and you've met your deductible, your co-insurance
payment of 20% would be $20. The health insurance plan pays the rest of the allowed
amount.

Commissioner of the Mississippi Insurance Department (Commissioner)

The Commissioner is an elected official who oversees every aspect of the Mississippi
Insurance Department. In terms of rate review, the Commissioner has the final say
as to whether a rate may be implemented and he or she may approve a rate, disapprove
a rate, request more information, or approve a rate at a reduced amount in compliance
with state and federal laws. However, in many instances the Commissioner must approve
what would appear to be a substantial rate increase if it complies with all state
and federal laws

Community Rating

A method for setting premium rates for health insurance plans under which all policy
holders are charged the same premium for the same coverage. "Modified Community
Rating" generally refers to a rating method under which health care plans are permitted
to vary premiums based on specific demographic characteristics (age, gender, location)
but cannot vary premiums based on the health status or claims history of policy
holders.

Co-payment

A fixed amount (for example, $20) you pay for a covered health care service, usually
when you receive the service. The amount can vary by the type of covered health
care service.

Corrective Order

An order issued by the Commissioner specifying corrective actions that the Commissioner
has determined are required of a licensed individual or company.

Cost Sharing

A feature of health plans where beneficiaries are required to pay a portion of the
cost of their care. Examples include co-payments, coinsurance and annual deductibles.

Covered Benefit

A general term referring to any service (such as an office visit, laboratory test,
surgical procedure, etc.) or supply (such as prescription drugs, durable medical
equipment, etc.) covered by a health insurance plan in the normal course of a patient's
healthcare.

Deductible

The amount you owe for health care services your health insurance or plan covers
before your health insurance or plan begins to pay. For example, if your deductible
is $1500, your plan won't pay anything until you've met your $1500 deductible for
covered health care services subject to the deductible. The deductible may not apply
to all services.

Dual Eligibles

A term used to describe an individual who is eligible for Medicare and some level
of Medicaid benefits. Most dual eligibles qualify for full Medicaid benefits including
nursing home services and Medicaid pays their Medicare premiums and cost sharing.
For other dual eligibles Medicaid provides the "Medicare Saving Program" through
which enrollees receive assistance with Medicare premiums, deductibles and other
cost sharing requirements.

Early and Periodic Screening, Diagnosis and Treatment [EPSDT] Services

One of the services that states are required to include in their basic benefits
package for all Medicaid eligible children under 21. EPSDT services include periodic
screenings to identify physical and mental conditions, as well as vision, hearing
and dental problems. Services also include follow up diagnostic and treatment services
to correct conditions identified during a screening, without reference to whether
the State Medicaid plan covers those services for adult beneficiaries.

Employee Retirement Income Security Act of 1974 (ERISA)

ERISA refers to the Employee Retirement Income Security Act of 1974, which set minimum
standards for most voluntarily established pension and health plans in private industry
to provide protections for individuals in these plans. When reference is made to
an "ERISA plan," that means that the plan is generally subject to the federal requirements
established under the Act and is not subject to applicable State insurance regulatory
requirements. Therefore, MID does not have jurisdiction to review the rates of ERISA
plans. Examples would be self-funded programs, union negotiated plans, and even
the State Employees Health Insurance Program.

Essential Health Benefits

The ACA requires all individual and small group health insurance plans sold after
2014 to include a basic package of ten general categories of benefits, including
hospitalization, outpatient services, maternity care, prescription drugs, emergency
care and preventive services among other benefits. It also places restrictions on
the amount of cost-sharing that patients must pay for these services. Mississippi
has already chosen its Essential Health Benefits benchmark plan, but under ACA,
this could change in 2016.

Exchange ("the Exchange")

The ACA calls for the creation of new "American Health Benefit Exchanges" in each
State to assist individuals and small businesses in comparing and purchasing qualified
health insurance plans. Exchanges will also determine who qualifies for subsidies
and make subsidy payments to insurers on behalf of individuals receiving them. They
will also accept applications for other health coverage programs such as Medicaid
and CHIP.

Experience Rating

A method of setting premiums for health insurance policies based on the claims history
of an individual or group.

External Review

The review of a health plan's determination that a requested or provided health
care service or treatment is not or was not medically necessary by a person or entity
with no affiliation or connection to the health plan.

Federal Employees Health Benefits Program (FEHBP)

A program that provides health insurance to employees of the U.S. Federal Government.
Federal employees choose from a menu of plans that include fee for service plans,
plans with a point of service option, and health maintenance organization plans.
There are more than 170 plans offered; a combination of national plans, agency-specific
plans, and more than 150 HMO's serving only specific geographic regions. The various
plans compete for enrollment as employees can compare the costs, benefits and features
of different plans. The State of Mississippi has no jurisdiction or oversight over
FEHBP.

Fee for service (FFS)

A traditional method of paying for medical services under which doctors and other
providers are paid for each service they provide. Bills are either paid by the patient
who then submits them to the insurance company, or submitted by the provider to
the patient's insurance company for reimbursement.

Formulary

The list of drugs covered fully or in part by a health plan.

Flexible Spending Account (FSA)

A Flexible Spending Account is a financial account set up by an employer. FSAs let
employees put aside part of their earnings to pay for certain qualified health care
and dependent care expenses that are not paid for by their insurance companies.
This money is not subject to payroll taxes.

Grandfathered Plans

A group health plan that enrolled members on or before March 23, 1010. Grandfathered
plans are exempt from some, not all, provisions of the ACA. A grandfathered plan
can lose this status if it makes certain changes that reduce benefits or increase
costs to consumers.

Grievance procedure

The required appeal process a health insurer provides for you to protest a decision
regarding medical necessity or claim payment.

Group Health Plan

An employee welfare benefit plan that is established or maintained by an employer
or by an employee organization (such as a union), or both, that provides medical
care for participants or their dependents directly or through insurance, reimbursement
or otherwise.

Guaranteed Issue

A requirement that health insurers sell a health insurance policy to any person
who requests coverage.

Guaranteed Renewability

A requirement that health insurers renew coverage under a health plan except in
instances of a failure to pay the required premium or fraud. HIPAA requires that
all health insurance be guaranteed renewable. renewable.

Health Care Cooperative (Co-op)

A nonprofit, member run health insurance organization, governed by a board of directors
elected by its members. Co-op's provide insurance coverage to individuals and small
businesses and can operate at state, regional and national levels.

Health Insurance Exchange

In addition to the Exchanges created as a result of ACA, there are other public
and private health insurance exchanges. These are purchasing arrangements through
which insurers offer and small employers and individuals purchase health insurance.
State, regional or national exchanges could be established to set standards for
what benefits would be covered, how much insurers could charge, and the rules insurers
must follow in order to participate in the insurance market. Individuals and small
employers would select their coverage within this organized arrangement.

Health Insurance Portability Act of 1996 (HIPAA)

HIPAA is a law designed to provide privacy standards to protect patients' medical
records and other health information provided to health plans, doctors, hospitals
and other health care providers. It also eased the "job lock" problem by making
it easier for individuals to move from job to job without the risk of being unable
to obtain health insurance or having to wait for coverage due to pre-existing medical
conditions. The HIPAA standards were developed by the Department of Health and Human
Services and provide patients with access to their medical records and more control
over how their personal health information is used and disclosed. They represent
a uniform, federal floor of privacy protections for consumers across the country.
Many states also have their own privacy statutes.

Health Maintenance Organization (HMO)

An HMO is a type of managed care organization (health plan) that provides health
care coverage through a network of hospitals, doctors and other health care providers.
Typically, the HMO only pays for care that is provided from an in-network provider.
Depending on the type of coverage you have, state and federal rules govern disputes
between enrolled individuals and the plan.

Health Reimbursement Account (HRA)

A tax exempt account that can be used to pay for current of qualified health expenses.
HRA's are established benefit plans funded solely by employer contributions with
no limits on the amount an employer can contribute. HRA's are often paired with
a high deductible health plan, but are not required to do so.

Health Savings Account (HSA)

Individuals covered by a qualified high deductible health plan (HDHP) (and have
no other first dollar coverage) are able to open an HSA on a tax preferred basis
to save for future qualified medical and retiree health expenses. Additional information
about HSAs can be found on the U.S. Treasury Web site: http://www.treas.gov/offices/public-affairs/hsa/.

High Deductible Health Plan (HDHP)

A type of health insurance plan that compared to traditional health insurance plans,
requires greater out-of-pocket spending, although premiums are usually lower. In
2011, an HSA-qualifying HDHP must have a deductible of at least $1,200 for single
coverage and $2,400 for family coverage. The health plan must also limit the total
amount of out-of-pocket cost-sharing for covered benefits each year to $5,950 for
single coverage and $11,900 for families.

High Risk Pool

State programs designed to provide health insurance to residents who are considered
medically uninsurable and are unable to buy coverage in the individual market. In
Mississippi, the high risk pool is called the Mississippi Comprehensive Health Insurance
Risk Pool Association.

Indemnity Plan

A health plan that allows you to go to any physician or provider you choose, but
requires that you pay for the services yourself and file claims for reimbursement.

Individual Mandate

An ACA requirement that most people, with a few exceptions, maintain "minimum essential"
health insurance coverage or pay a penalty. This provision of the ACA was reviewed
by the U.S. Supreme Court and ultimately, the Court in the summer of 2012 determined
the mandate to be constitutional and therefore it will become effective in 2014.

Liability Insurance

Insurance coverage that offers protection against claims alleging that a property
owner's negligence or inappropriate action resulted in bodily injury or property
damage to another property.

Lifetime Limit

As a result of the Affordable Care Act (ACA), group health plans, as well as health
insurance issuers offering group or individual health insurance, are prohibited
from imposing lifetime limits on the dollar value of benefits for any participant
or beneficiary. However, plans are permitted to place lifetime or annual limits
on specific covered benefits that are not considered "essential health benefits"
under the ACA.

Long-term Care

Services that include those needed by people to live independently in the community
such as home health and personal care as well as services provided in institutional
settings such as nursing homes. Medicaid is the primary payer for long-term care;
many of these services are not covered by Medicare or private insurance.

Managed Care

A health delivery system that seeks to control access to and utilization of health
care services both to limit health care costs and to improve the quality of the
care provided. Managed care arrangements typically rely on primary care physicians
to act as "gatekeepers" and manage the care their patients receive.

Mandatory benefits

A requirement in state or federal law that all health insurance policies provide
coverage for a specific health care benefit or provider, such as mental health services
or infertility services, or the services of a podiatrist. Every State has different
mandated benefits. ERISA plans do not have to include State mandated benefits.

Maximum out-of-pocket expense

The maximum amount someone covered under a health plan must pay during a certain
period for expenses covered by the plan. Until the maximum is reached, the person
covered is required to pay a copayment or a percentage on each claim.

Medicaid

A joint state and federal program that provides health care coverage to eligible
categories of low-income individuals. Rules for eligible categories (such as children,
pregnant women, people with disabilities, etc.), and for income and asset requirements,
vary by state. Coverage is generally available to all individuals who meet these
state eligibility requirements.

Medical Loss Ratio (MLR)

Medical Loss Ratio refers to the percentage of your premium dollars that an insurance
company spends on providing you with health care and improving the quality of your
care, versus how much is spent on administrative and overhead costs and, in some
cases, salaries or bonuses. The Affordable Care Act requires that 80-to-85% of the
money collected by insurance companies be spent on health care services and health
care quality improvement.

Medical Loss Ratio Rebate

If your health insurance company fails to meet the MLR minimum standards, they must
provide you or your employer with a rebate. In the case of an employer rebate, the
employer must allocate the rebate appropriately amongst the health plan participants.

Medicare

Enacted in 1965 Medicare is a federal government entitlement program that provides
health care coverage for all eligible individuals age 65 or older or under age 65
with a disability, regardless of income or assets. Eligible individuals can receive
coverage for hospital services (Medicare Part A), medical services (Medicare Part
B), and prescription drugs (Medicare Part D). Together, Medicare Part A and B are
known as Original Medicare. Benefits can also be provided through a Medicare Advantage
plan (managed care option) (Medicare Part C).

Medicare Advantage

Medicare beneficiaries can choose to receive most or their entire Medicare benefits
through a private health plan. Also known as Medicare Part C. Health plans contract
with the federal government and are required to offer at least the same benefits
as Medicare, but may follow different rules and may offer additional benefits. Unlike
original Medicare, enrollees may not utilize any health care provider that accepts
Medicare, and may be required to pay higher costs if they choose an out-of-network
provider or one outside of the plan's service area.

Medicare Supplement (Medigap) Insurance

Private insurance policies that can be purchased to "fill-in the gaps" and pay for
certain out-of-pocket expenses (like deductibles and coinsurance) not covered by
Medicare.

Minimum Creditable Coverage

The minimum level of benefits that must be included in a health insurance plan in
order for an individual to be considered insured. Minimum creditable coverage standards
have been established as part of the Affordable Care Act (ACA).

Mississippi Insurance Department (MID)

The MID enforces all laws and regulations governing insurance and all insurance
companies, corporations, associations, or orders. The MID works hard to create an
environment encouraging a competitive marketplace for the sale of insurance products
and services while providing the State's citizens with the maximum amount of consumer
protection. As part of its duties, the MID oversees health insurance rate increases
in the State, pursuant to applicable state and federal laws, and protects consumers
from unreasonable rate increases.

National Association of Insurance Commissioners (NAIC)

The NAIC is the U.S. standard-setting and regulatory support organization created
and governed by the chief insurance regulators from the 50 states, the District
of Columbia and five U.S. territories. Through the NAIC, state insurance regulators
establish standards and best practices, conduct peer review, and coordinate their
regulatory oversight. NAIC staff supports these efforts and represents the collective
views of state regulators domestically and internationally. NAIC members, together
with the central resources of the NAIC, form the national system of state-based
insurance regulation in the U.S.

Network

All physicians, specialists, hospitals, and other providers who have agreed to provide
medical care to HMO or other managed care plans members under terms of the contract
with the plan. Insurance contracts with preferred provider benefits also use networks.

Open Enrollment Period

A specified period during which individuals may enroll in a health insurance plan
each year. In certain situations, such as if one has had a birth, death or divorce
in their family, individuals may be allowed to enroll in a plan outside of the open
enrollment period.

Out-of-Network Provider

A health care provider (such as a hospital or doctor) that is not contracted to
be part of a managed care organization's network (such as an HMO or PPO). In many
cases, if a patient uses an out-of-network provider, he or she might be subject
to a higher payment, i.e. the plan would pay less and the patient would be responsible
for paying more of the provider's costs.

Out-of-Pocket- Limit

An annual limitation on all cost-sharing for which patients are responsible under
a health insurance plan. This limit does not apply to premiums, balance-billed charges
from out of network health care providers or services that are not covered by the
plan.

Patient Protection and Affordable Care Act (PPACA)

See Affordable Care Act (ACA).

Pay for Performance

A health care payment system in which providers receive financial rewards for meeting
or exceeding quality and sometimes cost benchmarks. Some systems also penalize providers
who do not meet established benchmarks. The goal of pay for performance programs
is to improve the quality of care over time.

Pre-existing condition exclusion

The period of time that an individual receives no benefits under a health insurance
plan for an illness or medical condition for which an individual received medical
advice, diagnosis, care or treatment within a specified period of time prior to
the date of enrollment in the health insurance plan. As a result of the ACA, for
plan years beginning on or after January 1, 2014 group health plans and health insurance
issuers offering group or individual health insurance coverage may not impose any
preexisting condition exclusion with respect to such plan or coverage. As a result
of the ACA, there is currently a prohibition on preexisting exclusions for enrollees
under 19 years of age.

Preferred Provider Organization (PPO)

A type of managed care organization (health plan) that provides health care coverage
through a network of providers. Typically, the PPO requires the policyholder to
pay higher costs when they seek care from an out-of-network provider. Depending
on the type of coverage you have, state and federal rules govern disputes between
enrolled individuals and the plan.

Preferred Risk

A proposed insured who presents a significantly less than average likelihood of
using health care services and who is charged a lower than standard premium rate
as a result.

Premium

The amount you pay for your health insurance. You and/or your employer usually pay
it on a monthly, quarterly or annual basis.

Premium Subsidies

A fixed amount of money or a designated percentage of the premium cost that is provided
to help people purchase health coverage. Premium subsidies are usually provided
on a sliding scale based on an individual's or families income. The ACA provides
for such subsidies starting in 2014.

Portability of Coverage

Rules allowing people to obtain coverage as they move from job to job or in and
out of employment. Portability allows individuals changing jobs guaranteed coverage
with the new employer without a waiting period. In addition, insurers must waive
any pre-existing condition exclusions for individuals who were previously covered
within a specified time period. Portable coverage can also be health coverage that
is not connected to an employer, allowing individuals to keep their coverage when
they have a change in employment.

Provider

Qualified Health Plan (QHP)

Under the ACA, starting in 2014, an insurance plan that is certified by an Exchange,
provides essential health benefits, follows established limits on cost sharing (like
deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements.
A qualified health plan will have a certification by each exchange in which it is
sold.

Reinsurance

Reinsurance is insurance for insurance companies and employers that self-insure
their employees’ medical costs. Through government funded reinsurance programs,
federal or state governments pay for a portion of the very high health costs, experienced
by insurers. By limiting insurers’ exposure to these high health care costs, these
programs enable insurers to lower premiums they charge to employers and individuals.

Rescission

The process of voiding a health plan from its inception usually based on the grounds
of material misrepresentation or omission on the application for insurance coverage
that would have resulted in a different decision by the health insurer with respect
to issuing coverage. The ACA prohibits group health plans and health insurance issuers
offering group or individual coverage from rescinding coverage except while an individual
has performed an act or practice constituting fraud or misrepresented a material
fact.

Risk Adjustment

The process of increasing or reducing payments to health plans to reflect higher
or lower than expected spending. Risk adjusting is designed to compensate health
plans that enroll an older and sicker population as a way to discourage plans from
selecting only healthier enrollees.

Section 125 plans

A section 125 plan allows employees to receive specified benefits, including health
benefits on a pre-tax basis. Section 125 plans enable employees to pay for health
insurance premiums on a pre-tax basis whether the insurance is provided by the employer
or purchased directly in the individual market.

Self-Insured Plan

A plan where the employer assumes direct financial responsibility for the costs
of enrollees’ medical claims. Employer sponsored self-insured plans typically contract
with a third party administrator or insurer to provide administrative services for
the plan. The State of Mississippi does not have authority over self-insured plans.

Small Business Health Options Program (SHOP)

Program created by the ACA where health insurance exchanges will be open to small
businesses up to 100 employees, allowing them to buy qualified health benefits for
employees.

Tax Credit

A tax credit is an amount that a person/family can subtract from the amount of income
tax that they owe. If a tax credit is refundable, the taxpayer can receive a payment
from the government to the extent that the credit is greater than the amount of
the tax they would otherwise owe.

Tax Deduction

A deduction is an amount that a person/family can subtract from their adjusted gross
income when calculating the amount of the tax that they owe. Generally, people who
itemize their deductions can deduct the portion of their medical expenses, including
health insurance premiums that exceed 7.5% of their adjusted gross income. As a
result of the ACA, the threshold will increase from 7.5% AGI to 10% of AGI for tax
years beginning after December 2012.